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U.S. scores small wins during trade czar's Indo-Pacific tour

Tai Makes Bid For New Order In Visits To Japan, South Korea And India

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 U.S. Trade Representative Katherine Tai addresses the Geneva Graduate Institute.    © Reuters

New York: U.S. Trade Representative Katherine Tai wrapped up her visit to the Indo-Pacific on Tuesday, a trip that aimed to lay the groundwork for a new trade order with like-minded countries.

In her first journey to Asia as U.S. President Joe Biden's trade czar, Tai met her counterparts from India, South Korea, and Japan, countries that rank among America's top ten trading partners.

"President Biden and I are convinced that U.S. trade policy requires a fundamental shift to ensure that our policies and actions focus on the impact that trade and trade agreements have on real, working people," Tai said in New Delhi, the final leg of her trip, on Monday.

Her visit to the region comes as U.S.-China tensions run high in the region on both economic and security fronts. The U.S. has joined with Japan to call for a "free and open Indo-Pacific" in a reference to increased Chinese maritime incursions while Beijing has sought to entrench itself further economically in the region. China is a member of the Regional Comprehensive Economic Partnership, the world's largest free trade bloc, and has applied to be a member of the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

One aim was to break from the Trump administration, which took a harder line on trade issues, even with allies.

"One thing that she certainly achieved was to present a softer face to the USTR than her predecessor had done," said Rafiq Dossani, director of the RAND Center for Asia Pacific Policy. He added that leaders seemed pleased with Tai's less volatile image, but that without major outcomes from the meetings, that reassurance was "symbolic."

The Biden administration is attempting a delicate balancing act between lessening trade barriers and pursuing a labor-focused domestic agenda. Rather than return with a massive new free trade agreement, Tai achieved small wins, including agreements to hold regular meetings on trade and newly opened discussions on rolling back tariffs.

Throughout the visit, Tai hinted at Washington's intention to create a new economic framework for the Indo-Pacific region. The framework will involve clean energy, digital trade, and supply chain resiliency and could be launched at the beginning of next year, but she and other U.S. officials have been reticent to share further details.

Tai and Indian Commerce Minister Piyush Goyal revived the United States-India Trade Policy Forum, which sought to resolve trade and investment issues. The forum ran from 2005 to 2017, but it was paused to negotiate a bilateral trade deal. Such a pact has yet to come to pass.

Their relationship has been warming recently. Most notably, India has ramped up its engagement with "the Quad" security alliance between itself, the U.S., Japan and Australia. Prime Minister Narendra Modi's administration is signaling it is open to reducing trade barriers -- a significant development for the historically protectionist country.

"This is like a 'getting-to-know-you' visit, to understand where both sides stand," said Tanvi Madan of the Brookings Institution, a U.S.-based think tank. "Washington perhaps wants to get a sense of how serious is the shift in the Modi government's approach on trade."

Goyal tweeted on Tuesday that the forum's revival marked "a new beginning" for New Delhi's trade relationship with Washington.

Tai on Monday said the partnership had previously not been "living up to its potential." She reiterated the U.S. frustration with India's high tariffs and unpredictable regulations, and expressed a commitment to working toward more "worker-centric" trade policies between the two nations.

Tai and Goyal also revived the forum's working groups, including one on intellectual property, which led to a knowledge share on genetic resources this week and India "clarifying" its patent administration, according to a joint statement released after the forum.

The leaders took steps toward easing trade for pork, mangoes, pomegranates, and other foods. India expressed interest in restoring its status under a program allowing duty-free exports to the U.S., which was revoked in 2019 by the Trump administration.

Tai began her trip in Tokyo on Nov. 15, where she and Japanese ministers agreed to begin regular meetings on trade-related issues, particularly those relating to climate, digital trade and pandemic recovery.

Days before Tai's arrival in Tokyo, they affirmed their mutual concern about China's steel and aluminum production, which they say has led to "excess capacity" worldwide. They also agreed to begin conversations about easing tariffs.

The U.S. public has become more suspicious of trade liberalization in recent years. After President Barack Obama was criticized for joining the Trans-Pacific Partnership in 2016, which is now the CPTPP, President Donald Trump withdrew from the deal the following year. Biden appears reluctant to reenter it, or to eliminate his predecessor's tariffs on steel and aluminum that were intended to prop up American manufacturing sector.

Washington did roll back metal tariffs for the European Union last month. But the taxes are still in place for Japan, South Korea, India and other countries.

Increased cooperation between Washington and its Indo-Pacific partners comes amid increasing Chinese assertiveness and a broad desire to decrease reliance on Beijing's goods. Both the U.S. and South Korea get more imports from China than any other country.

Japan, South Korea, India, and the United States are also coordinating a release of oil reserves over the next few months in an attempt to decrease prices, the White House announced on Tuesday. China and the U.K. will join them in releasing reserves. Expressing alarm over rising gas prices, Biden last week asked his top antitrust agency to investigate whether companies were artificially inflating them.

The outcomes from Tai's trip may be less conspicuous than, say, last month's agreement to reduce steel tariffs with the EU. But Madan emphasized that success is gradual.

"It's also a win when you can figure out how to manage differences or close gaps," she said. "They might not be a big, bright shiny object like a [free trade agreement]. But the smaller elements add up over time."

Reporting by Monica Hunter-Hart.